A 21st Century Version of the Boston Tea Party

10/23/2013

It's safe to say that people don't like paying taxes. America was born out of a tax rebellion, and Americans have resisted every variety of tax ever since. Some of them even go as far as renouncing their American citizenship to avoid the IRS.

Expatriation sounds like an awfully big step just to pay less tax. But more and more Americans are doing it. In 1994, Campbell's Soup heir John T. "Ippy" Dorrance III saw greener pastures in Ireland, trading what was then a 55% estate tax for Ireland's 2%. And just last year, Facebook founder Eduardo Saverin "defriended"
Uncle Sam and the IRS after moving to Singapore, potentially saving hundreds of millions in tax. Americans who give up their citizenship pony up an "exit tax" on the value of their assets when they leave, essentially paying as if they had sold everything the day before surrendering their passport. But that doesn't stop the determined from leaving — in the second quarter of this year, 1,131 Americans bid bon voyage to their citizenship.

Americans aren't the only ones who say "enough" to their home countries' taxes. Sir Richard Branson, the British billionaire and founder of Virgin Group, revealed this month that he has sold his 200-acre Oxfordshire estate and moved full-time to Necker Island, his retreat in the British Virgin Islands. Now Britain's Sunday Times has accused him of doing it to save taxes.

Branson responds that "I have not left Britain for tax reasons, but for my love of the beautiful British Virgin Islands and in particular Necker Island . . . . We feel it gives me and my wife Joan the best chance to live another productive few decades. We can also look after our health." He adds that "I have been very fortunate to accumulate so much wealth in my career, more than I need in my lifetime, and would not live somewhere I don't want to for tax reasons."

Necker sounds like a pleasant-enough exile. The Balinese-inspired "Great House" boasts nine bedrooms, including a 1,500-square-foot master suite. There are six one-bedroom "Bali houses" for guests scattered about the grounds. And there are two swimming pools and two tennis courts. The island is even home to an endangered species, the Virgin Islands dwarf gecko. Sir Richard Branson is a smart man. (Forbes magazine ranks him the sixth-richest man in Britain, with an estimated $4.6 billion fortune.) It could not have escaped his attention that the top income tax rate in the islands is 45 percentage points lower than it is in Britain. If you're thinking "wait a minute, the top rate in Britain is 45%, so that means he's paying nothing in the islands," you're right.

What do you think? Does Branson just prefer gentle Caribbean trade winds over dreary English winters? Or is the sunny tax climate the real lure?

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